NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 I Transparency International is the global civil society organisation leading the fight against corruption. Through more than 100 chapters worldwide and an international secretariat in Berlin, we raise awareness of the damaging effects of corruption and work with partners in government, business and civil society to develop and implement effective measures to tackle it. Lead Researcher: Rama Krishna Regmee, MA Researcher: Prakash C. Bhattarai MA (Ph.D. candidate) Every effort has been made to verify the accuracy of the information contained in this report. All information was believed to be correct as of April 2014. Nevertheless, Transparency International Nepal cannot accept responsibility for the consequences of its use for other purposes or in other contexts. © 2014 Transparency International Nepal. All rights reserved. II NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 TABLE OF CONTENTS I. INTRODUCTORY INFORMATION 03 II. ABOUT THE NATIONAL INTEGRITY SYSTEM ASSESSMENT 05 III. EXECUTIVE SUMMARY 11 IV. COUNTRY PROFILE 17 V. CORRUPTION PROFILE 25 VI. ANTI-CORRUPTION ACTIVITIES 27 VII. NATIONAL INTEGRITY SYSTEM 1. LEGISLATURE - SPECIAL NOTE 31 2. EXECUTIVE 35 3. JUDICIARY 44 4. PUBLIC SECTOR 54 5. LAW ENFORCEMENT AGENCIES 64 6. ELECTORAL MANAGEMENT BODY 73 7. SUPREME AUDIT INSTITUTION 80 8. ANTI-CORRUPTION AGENCIES 87 9. POLITICAL PARTIES 95 10. MEDIA 103 11. CIVIL SOCIETY 111 12. BUSINESS 117 VIII. CONCLUSION AND RECOMMENATIONS 125 IX. BIBLIOGRAPHY 139 NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 1 2 NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 I. INTRODUCTOry INFORMATION Transparency International Nepal (TIN) is pleased to release the report National Integrity System Assessment Nepal 2014. It describes the latest status of 11 pillars of NIS in terms of their capacity, governance and role besides pointing out the gap between laws and practices. The National Integrity System of Nepal shows vulnerability of key institutions in a situation marked by political uncertainty, absence of a legislature and a worrying gap between law and practice. This publication sheds light on ways to contribute to the cause of good governance by improving the performance of specific pillars of the NIS: Executive, Judiciary, Public Sector, Law Enforcement Agencies, Electoral Management Body, Supreme Audit Institution, Anti-corruption Agencies, Political Parties, Media, Civil Society, and Business. TIN takes NIS as a holistic approach to combat corruption. It believes that an assessment like this makes all concerned informed about the strength and weaknesses of the pillars and encourages them to make improvements. The assessment, TIN is confident, could be instrumental in sensitizing the actors and motivating the interplay among the pillars of NIS. TIN would like to thank the research team: Lead Researcher Rama Krishna Regmee and Researcher Prakash C. Bhattarai for the special care they took in all the processes of research. TIN appreciates the cooperation and help provided by various officials of ministries, private sector organizations and stakeholders in different phases of the NIS Assessment. Bishnu Bahadur K.C. President Transparency International Nepal NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 3 4 NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 II. ABOUT THE NATIONAL INTEGRITY SYSTEM ASSESSMENT The National Integrity System Assessment approach used in this report provides a framework to analyse both the vulnerabilities of a given country to corruption as well as the effectiveness of national anti- corruption efforts. The framework includes all principal institutions and actors that form a state. These include all branches of government, the public and private sector, the media, and civil society (the ‘pillars’ as represented in the diagram below). The concept of the National Integrity System has been developed and promoted by Transparency International as part of its holistic approach to fighting corruption. While there is no blueprint for an effective system to prevent corruption, there is a growing international consensus as to the salient institutional features that work best to prevent corruption and promote integrity. A National Integrity System assessment is a powerful advocacy tool that delivers a holistic picture of a country’s institutional landscape with regard to integrity, accountability and transparency. A strong and functioning National Integrity System serves as a bulwark against corruption and guarantor of accountability, while a weak system typically harbours systemic corruption and produces a myriad of governance failures. The resulting assessment yields not only a comprehensive outline of reform needs but also a profound understanding of their political feasibility. Strengthening the National Integrity System promotes better governance across all aspects of society and, ultimately, contributes to a more just society. NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 5 Definitions The definition of ‘corruption’ which is used by Transparency International is as follows: ‘The abuse of entrusted power for private gain. Corruption can be classified as grand, petty and political, depending on the amounts of money lost and the sector where it occurs.’1 ‘Grand corruption’ is defined as ‘Acts committed at a high level of government that distort policies or the functioning of the state, enabling leaders to benefit at the expense of the public good.’2 ‘Petty corruption’ is defined as ‘Everyday abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens, who often are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies.’3‘Political corruption’ is defined as ‘Manipulation of policies, institutions and rules of procedure in the allocation of resources and financing by political decision makers, who abuse their position to sustain their power, status and wealth.’4 Objectives The key objectives of the National Integrity System assessment are to generate: • an improved understanding of the strengths and weaknesses of Nepal’s National Integrity System within the anti-corruption community and beyond • momentum among key anti-corruption stakeholders in Nepal for addressing priority areas in the National Integrity System The primary aim of the assessment is therefore to evaluate the effectiveness of Nepal’s institutions in preventing and fighting corruption and in fostering transparency and integrity. In addition, it seeks to promote the assessment process as a springboard for action among the government and anti-corruption community in terms of policy reform, evidence-based advocacy or further in-depth evaluations of specific governance issues. This assessment should serve as a basis for key stakeholders in Nepal to advocate for sustainable and effective reform. Methodology In Transparency International’s methodology, the National Integrity System is formed by 13 pillars representing all key public and private institutions in the country. 1.The Anti-Corruption Plain Language Guide, Transparency International, 2009, p.14. http://www.transparency.org/whatwedo/pub/the_anti_corruption_plain_language_guide [accessed 21 December 2012]. 2. Ibid., p.23. 3. Ibid., p.33. 4. Ibid. p.35. 6 NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 CORE GOVERNANCE NON-GOVERNMENTAL INSTITUTIONS PUBLIC SECTOR AGENCIES ACTORS Legislature Public sector Political parties Executive Law enforcement agencies Media Judiciary Electoral management Civil society body Ombudsman Business Supreme audit institution Anti-corruption agency Each of the 11 pillars are assessed along three dimensions that are essential to its ability to prevent corruption. Since Nepal does not have ombudsman it has not been assessed. Nepal did not have legislature during the study period, so a special note has been prepared on it: The three dimensions under each pillar assess: • its overall capacity, in terms of resources and independence • its internal governance regulations and practices, focusing on whether the institutions in the pillar are transparent, accountable and act with integrity • its role in the overall integrity system, focusing on the extent to which the institutions in the pillar fulfill their assigned role with regards to preventing and fighting corruption Each dimension is measured by a common set of indicators. The assessment examines for every dimension both the legal framework of each pillar as well as the actual institutional practice, thereby highlighting any discrepancies between the formal provisions and reality in practice. DIMENSION INDICATORS (LAW AND PRACTICE) Capacity Resources Independence Governance Transparency Accountability Integrity Role within governance Pillar-specific indicators system The assessment does not seek to offer an in-depth evaluation of each pillar. Rather it seeks breadth, covering all relevant pillars across a wide number of indicators in order to gain a view of the overall system. The assessment also looks at the interactions between pillars, as weaknesses in a single institution could lead to serious flaws in the entire system. Understanding the interactions between pillars helps to prioritise areas for reform. NATIONAL INTEGRITY SYSTEM ASSESSMENT NEPAL 2014 7 In order to take account of important contextual factors, the evaluation is embedded in a concise analysis of the overall political, social, economic and cultural conditions – the ‘foundations’ – in which the 13 pillars operate.